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Saudi LCGPA Launches Additional Price Preference for Local Products

Saudi LCGPA Launches Additional Price Preference for Local Products

Tuesday, 22 September, 2020 - 05:00
The Saudi Local Content and Government Procurement Authority (LCGPA) launched an additional price preference initiative to support 208 national products. (SPA)

The Saudi Local Content and Government Procurement Authority (LCGPA) launched an additional price preference initiative to support 208 national products in the medicine, pharmaceuticals and medical supplies sectors, as well as other industrial sectors.


The initiative was launched in cooperation with the Ministry of Industry and Mineral Resources and the Spending Efficiency Center.


The initiative aims to increase the price preference percentage granted to these products when compared to foreign counterparts during the bidding process in government competitions, the authority said.


The percentage, which was earlier determined by the local content preference regulations at 10%, was raised to 30% maximum, based on each sector’s standards. The move aims to mitigate the financial and economic impact on those sectors amid the COVID-19 pandemic.


The authority said the products were determined based on criteria differing from sector-to-sector according to its nature.


The new mechanism is based on providing a price preference of up to 20% for the products covered by the initiative; 10% under the initiative and 10% as per the price preference regulations. Every 10% preference will be based on the specific criteria of each sector targeted under the initiative.


Products identified in the Medicine and Pharma Sector are granted an additional preference of up to 10%, being included in the list, plus the other 10% if the product contains domestic Active Pharmaceutical Ingredient (API).


The initiative is based on Article 10 of the regulations granting preference to local content, Saudi SMEs and publicly listed companies. It also aims to help the sectors achieve self-sufficiency and strengthen supply chain for the target products.


LCGPA expects that the estimated spending on national factories during the initiative period, which ends on Dec. 31, 2021, will range between SAR 2 billion and SAR 3 billion.


The authority said the products were identified after a detailed study by the work team in the initiative. The study included 10,000 products, excluding those in the mandatory list.


A list of the target national products and the additional preference rates for each product will be issued in detail, and each product will be distributed according to the category within the additional price preference initiative, the authority said.


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